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McInnes: Monopoly status warps ICBC labour dispute

Their work is only essential because no one else can do it

Jeff Gillies said his first response was “disbelief” when he heard that ICBC was going to the Labour Board to have the work of his members declared an essential service.

Photograph by: Ward Perrin
, Vancouver Sun Files

Jeff Gillies said his first response was “disbelief” when he heard that ICBC was going to the Labour Board to have the work of his members declared an essential service.

In an interview Wednesday, the vice-president of the Canadian Office and Professional Employees Union Local 378 said that despite the strike vote taken by his members, the unprecedented request by ICBC is a heavy hammer that shouldn’t apply to this particular labour dispute.

“We don’t think there are essential services at ICBC. It’s an insurance company.”

Gillies was referring to the legal definition in B.C.’s Labour Code, which defines essential services as a threat to “the health, safety or welfare of the residents of British Columbia” or “the provision of educational programs to students and eligible children under the School Act.”

When Finance Minister Kevin Falcon said earlier this week that he supports ICBC’s appeal to the Labour Board, he was likely reflecting the definition of “essential” that ordinary British Columbians would apply to being able to get or renew a driver’s licence or vehicle insurance.

Which of those definitions the Labour Board accepts remains to be seen, but the latest set of contract negotiations between the government-owned insurance company and its unionized staff raises a couple of difficult issues on top of the usual posturing that occurs in any labour dispute.

The first is why ordinary British Columbians might consider the work of an insurance company essential. In ICBC’s case, it’s a monopoly. We can’t buy basic auto insurance from anyone else. Without that insurance, it’s illegal to operate a vehicle.

ICBC also issues vehicle and operator’s licences, again as a monopoly.

Gillies argues that much of that work can continue because it is primarily carried out by brokers around the province. What the brokers can’t do on their own can be done by ICBC’s 1,000 managers, he said. Those will be arguments for the Labour Board.

What is uncontestable is that if there was competition for all insurance services, any British Columbians could bypass a labour dispute in the sector, thus ensuring that the work of no one company, whether private or publicly owned, could be considered essential by anyone’s definition. Such competition would also allow for real bargaining.

The previous contract for Gillies’ 4,700 members expired in 2010. As with the province’s teachers, the next agreement is covered by the two-year net-zero mandate imposed on all unionized public servants by the provincial government.

Gillies said the union could live with that but ICBC wants another three years under the new mandate, which is also a net zero but with a proviso that encourages unions to find ways to save money that can then be used for wage gains.

Gilles argues his members shouldn’t be subjected to what is essentially a five-year, zero net increase when the company they work for is profitable enough to be returning more than $1 billion to the provincial government over the next three years.

He points out that other people who earn a living extracted from the premiums British Columbians pay for their vehicle insurance are not having their compensation frozen, including auto body shops, lawyers, brokers who sell the policies and even ICBC’s executives.

Gillies has a point, or he would if ICBC was simply a profitable company that was producing a healthy profit for its owners. Under those circumstances, workers could naturally expect to share in the profits they helped to generate.

But while there is no doubt the productivity of ICBC employees contributes to keeping costs down, the amount of profit generated is based primarily on the premiums charged to motorists. As a monopoly provider, ICBC can charge whatever it needs to in order to generate a profit.

As taxpayers, British Columbians can be happy with the hundreds of millions in excess premiums ICBC has returned to the government. As motorists, not so much.

That second part creates the rationale for including ICBC employees in a net zero mandate.

Premier Christy Clark said she won’t increase taxes to give public servants a raise. It should follow, then, that ICBC shouldn’t increase rates to give its employees a raise. That rationale collapses, however, when the Clark government starts taking money from ICBC, as it is now doing, that could have been used to lower premiums.

What’s fair for ICBC employees gets hopelessly tied up in all these issues. Also lost is what is more to the point than fairness in assessing what people should be paid, which is any ability to test what the market will bear through unencumbered bargaining.